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| Keroche Breweries chief executive officer Tabitha Karanja. |
The cash crisis facing Kenya's second-largest brewer, Keroche Breweries, has deepened after it defaulted on its tax repayment plan and ran into payroll debts for more than two months.
Bouncenationkenya.com learned that the problem at the Naivasha-based brewery came to light in December when it was shut down by Kenya Revenue Service (KRA) officials, but the matter was quietly resolved during the festive season.
Last week, KRA officials returned to tormenting the brewer after it defaulted on a previously agreed tax refund plan in the final part of its long-running battle with the tax officer.
The firm's boss, Tabitha Karanja, said cash flow difficulties caused a two-month salary delay, but promised that her management team worked around the clock to pay employee dues.
She denied claims by some of her employees that her overdue salaries had reached six months.
He said the firm had not yet fully recovered from the ripple effects of the Covid-19 pandemic, three months after the containment measures were lifted, and needed to renegotiate its payment plan with the tax officer last week before leaving to continue. with operations.
"To be clear, the ripple effect of the disease has greatly affected our tax liability, resulting in delays of up to Sh 270 million," Ms. Karanja said in an interview at her office.
"We were able to comfortably pay Sh 200 million (tax) before Covid-19 hit us hard, but we had a slight delay in paying the outstanding amount."
Announcing that she has since stepped down to run for the Senate, Ms. Karanja said she was more understanding of the plight of the alcohol industry, which saw the KRA agree on a new payment plan.
The firm chose alternative dispute resolution (ADR) in its tax dispute with the KRA.
He said the firm was shut down by the tax office for at least two weeks before the current deal, but full operations resumed.
“While things are currently improving, we hope to continue to meet our tax obligations going forward,” she said.
"We've weathered the storm and will continue to pay our taxes with the goodwill of the KRA," he said.
Keroche has taken part in an expansion program in recent months, introducing two brands that aim to increase their market share.
It has recently launched Viena Ice Strong Lager with 10 percent alcohol content, aimed at consumers of all levels.
The brewer also introduced Brand X with 8.8 percent alcohol content.
Since the middle of last year, the brewer has been restructuring its operations and implementing a cost-cutting strategy to stay afloat.
At the height of the pandemic, the firm shrank in major operations, retaining only personnel who provided critical services such as maintenance.
The company also sent some of its employees on unpaid leave, while others extended their stay at home.
With its production facility with a production capacity of 30 different brands, Keroche targets more than 20 percent of the market share.
The company has experienced steady growth since its founding 18 years ago.
However, it has been in the limelight of taxpayers in recent years after new Commissioner Githii Mburu trained his guns on the alcohol industry in his quest to cover tax evasion in the industry.
Targets of the KRA's tax crackdown include London Distillers Kenya, whose executives are currently fighting tax evasion-related charges in court for claims of more than Sh2 billion. The taxpayer is also embroiled in a bitter feud with Mount Kenya Breweries over allegations of tax evasion.
Tax evasion in alcoholic businesses is said to cost the country at least Sh 10 billion a year in unpaid taxes.
Keroche, for his part, went in and out of court with the tax office over a tax dispute of Sh 9.1 billion.
The brewer received temporary orders that stopped the tax officer from linking his accounts, on the condition that he pays Sh 500 million until he appeals. The firm filed another appeal, saying it could not increase the amount.
The KRA also said it extended an olive branch to the company, including an alternative dispute settlement or a payment offer, but the brewer gave up. The matter is currently being handled out of court.
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